Fort Smith to investigate merging convention center, tourism marketing

A committee created to investigate the possibility of merging the management of the Fort Smith Convention Center and the Fort Smith Convention & Visitors Bureau (CVB) agreed Tuesday (Aug. 4) to “pursue the due diligence” required with such a merger, according to a report from CVB Director Claude Legris.

(The City Wire staff was not able to attend the meeting, but spoke with Legris and Fort Smith Mayor Ray Baker to gather information for this report.)

In May, the Advertising & Promotion Commission — the group that oversees the CVB — agreed to create a committee to address a looming funding financial shortfall with the convention center.

The city’s portion of the state’s tourism turnback funds are set to expire in 2010. The received around $1.8 million annually from the turnback program. Between 2001 and 2007, the city collected $13.23 million in turnback funds, with $4.36 million of that used to help pay down the 1997 sales and use tax bond debt. Proceeds from turnback funds between 2008 and 2010 are estimated at $4.47 million.

Without a financial cure, the city estimates a $696,257 operating loss in 2010, with a year-end fund balance of just $255,928 — meaning the city faces a potential budget expenditure of as much as $1.5 million in 2011, and between $1.8 million and $2 million for subsequent years. (Link here for a previous report from The City Wire that details the funding problem.)

On the new committee are Fort Smith Mayor Ray Baker; Tom Caldarera, Fort Smith restaurateur and member of the A&P Commission; Frankie Hamilton, director of the Fort Smith Convention Center; Fort Smith City Director Don Hutchings; Legris; Larry Schwartz, Fort Smith accountant and chairman of the Convention Center commission; and Ronnie Townsend, general manager of the Fort Smith Holiday Inn City Center and member of the A&P Commission.

Legris said the consensus of the group was that the idea of a merger was worth investigating, and they placed Legris in charge of working with committee members to develop a questionnaire. The questionnaire, to be sent to A&P and convention center directors around the state, will seek to learn more about the organizational structures, successes, failures, budgeting realities and other issues faced in the cities with a combined structure.

“It’s my opinion that any solution we come up with for Fort Smith will not be something that was just invented. This (combined convention center and tourism marketing effort) is working at other places in the state. Other cities have established a feasible financial structure and there is no reason we in Fort Smith can’t do the same,” Legris told The City Wire.

Mayor Baker said the committee would combine results from the questionnaire with input from public hearings and then present a solution to the Fort Smith Board of Directors.

The cities in Arkansas that have successfully merged tourism and convention center operations have done so with revenue from a prepared foods tax — aka, hamburger tax. Fort Smith has in place a 3% tax on hotels with which the A&P collected $803,591 in 2008. That amount is not near enough to cover A&P and convention center operations. A 1% tax on prepared foods in Fort Smith would generate between $1.5 million and $1.75 million annually. Fort Smith is one of the few active tourism cities in Arkansas without a hospitality tax on restaurants and other prepared-food providers.

Baker, who has adamantly opposed in the past any mention of pushing a prepared foods tax, said the committee’s job is to offer a solution.

“If the citizens want it (prepared foods tax), then who am I to stand in the way of that?” Baker told The City Wire when asked about his past opposition to the tax.

However, Baker would not say if he would publicly support or oppose a ballot item that would merge the A&P and convention center with the support of a prepared foods tax.